Planet Money

3:02 am

Fri April 26, 2013

The Lollipop War

I recently got a tour of the Spangler Candy Co., a family-owned firm in Bryan, Ohio. The company makes 10 million Dum Dums lollipops there every day, and it has a whole separate building where it stores the sugar — enough to fill eight Olympic-size swimming pools.

The CEO, Kirk Vashaw, says he wants to expand the factory and make even more candy there. There's just one thing he needs.

"Let us buy sugar on the free market," he says.

As it turns out, there are two prices for sugar: the price you pay in the U.S., and the price you pay almost everywhere else in the world.

The price in the U.S. is about 15 cents a pound higher than the price in the rest of the world. That costs Spangler Candy an additional $3 million a year.

The higher U.S. sugar price is spelled out in U.S. law. You can find it right here, in the latest version of the farm bill, which says the U.S. government shall guarantee a minimum price for sugar that is not to drop below 22.9 cents per pound.

Because of the higher price here, lots of candies that used to be made in the U.S. — Life Savers, candy canes — are now made overseas.

Candy makers have been fighting the sugar thing in Congress for years, but they keep losing to sugar farmers.

A few days after my trip to the Dum Dums factory, I went to Sabin, Minn., to meet a sugar beet farmer, Blane Benedict. "Our family's been farming here since the late 1870s," he told me as he showed me around the farm.

People in Sabin say the whole local economy benefits when the farmers start turning their beets into sugar. Benedict says the farmers need that special protection in the law because sugar farmers in other countries get help from their governments, too.

But Daniel Sumner, an economist at the University of California, Davis, who used to help set farm policy, doesn't buy it.

"It's a very common rationalization: 'The other kids are doing it,' " he says. Sumner points out that the sugar lobby spends more than all the other agriculture lobbies on political campaigns.

Of course, the candy makers have their own proposed legislation that would get rid of the sugar price rule — and, they say, would help keep candy-related jobs in the U.S.

That bill comes up regularly in Congress but always loses. The latest farm bill, which would extend the sugar program, is expected to pass.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

President Obama's administration is pushing to revive American industry, but some industries continue moving overseas, including production of hard candy. One reason is that U.S. candy makers keep losing a fight every time the Farm Bill comes up for renewal. Zoe Chace of NPR's Planet Money team is here to explain, and begins her report from the floor of the Spangler Candy Company in Bryan, Ohio.

ZOE CHACE, BYLINE: Some candy's still made here. Take lollipops, specifically Dum Dums.

(SOUNDBITE OF CANDY FACTORY)

UNIDENTIFIED MAN: Do you like orange?

CHACE: Sure.

UNIDENTIFIED MAN: It's a warm orange Dum Dum.

CHACE: Being in a candy factory is like being in a giant's kitchen. KitchenAids as tall as basketball hoops tower over us. Dean Spangler, the former head of the Spangler Candy Company, shows us around.

DEAN SPANGLER: We use about 100,000 pounds of sugar a day.

CHACE: He takes us into a whole separate building, just for this one ingredient. Four huge tanks of liquid sugar, enough sugar for about four days' worth of candy. These guys make 10 million Dum Dums a day. But the current CEO, Kirk Vashaw, he has even bigger dreams. He would up production at this plant, buy the subdivision across the street. If only he just had this one thing.

KIRK VASHAW: I ask them to guess: What's the one thing that you need? And people guess lower tax rates, and how about workers comp reform?

CHACE: He gets this laundry list of anti-regulation suggestions, but even if they got all these things put together, he says, that is not what's holding his company back.

VASHAW: If I paid zero taxes and got all those other things, it's not as important as the one thing that I need: Let us buy sugar on the free market. And there's this silence, and then this kind of collective, huh?

CHACE: Vashaw explains there are two prices for sugar: the price you pay in the United States, and the price you pay almost everywhere else in the world. The price you pay in the United States, over the last decade, it's about 15 cents more than you pay outside the country. If you're in the business of making candy, that adds up to a lot of money.

VASHAW: We're using 100,000 pounds a day. That's $15,000 a day.

CHACE: Comes to three to $4 million a year, and it's the law. It's right here, actually, in the latest version of the farm bill, Subtitle D: sugar. The U.S. government shall guarantee a minimum price for sugar that is not to drop below, quote, "22.9 cents per pound," end quote. That's for sugar beets. No matter how low the price goes in the rest of the world, here in the United States, you'll be paying at least 22.9 cents.

This is the fight the candy makers have been losing, losing it to these guys.

(SOUNDBITE OF CAR ENGINE STARTING)

BLANE BENEDICT: We're driving into the field where we're going to plant sugar beets in 2013, and the snow is only about three inches deep at the moment right here.

CHACE: Benedict says they need that line in the law. They need that special protection, because his competitors in other countries, they're getting help from their governments, too.

DANIEL SUMNER: It's a very common rationalization: The other kids are doing it, or that other guy's a bully or something.

CHACE: Daniel Sumner is an economist at UC Davis. He doesn't buy this argument. He used to work in the government, setting farm policy. Sure, other countries help their sugar farmers, he says, but there are other ways of dealing with that than by enshrining a minimum price into law. There's the World Trade Organization, set up for complaints just like this.

Really, he says, the sugar subsidy is political. The sugar lobby spends a ton of money on political campaigns, more than all the other agricultural lobbies. But it's not just farmers and their lobbyists who argue for these subsidies. We found Chris Lange and Judy Hanson hanging out at the Crow Bar in Sabin, a dive bar right in the shadow of the grain elevator.

They said, sure, farmers out here are rich. The rest of us benefit, too. You should see this sleek little economy wake up at harvest time, when the farmers start turning the sugar beets into sugar.

JUDY HANSON: There's a bad smell in the air, but it's the smell of money.

CHRIS LANGE: Smells like money, exactly.

HANSON: It smells like money.

LANGE: It smells like money. So it smells like success. It smells like people are getting shoes on kids' feet. It smells like we're building stuff, and everything trickles down from that.

CHACE: Back in Ohio, the Spangler Candy Factory, they'll tell you the opposite story. Because of the sugar price, they've had to move some production to Mexico. Candy makers have their own bill that would get rid of the sugar subsidies. It comes up regularly. It always loses. The farm bill, though, with the sugar program extension, it's expected to pass.